MRT/LRT rate hike not for service improvements but for debt service – labor group

Debt service and not service improvements will eat much of the proposed P11+1 rate hikes in the three rail systems (LRT lines 1& 2 and MRT-3), the labor group Partido ng Manggagawa (PM) said in a statement.

The group, which participated in yesterday’s public consultation on the proposed rate hike, explained that based on DOTC’s presentation, seventy seven percent (77%) of MRT-3 finances go to debt service in the form of Equity Rental Payments (ERP) to private consortium Metro Rail Transit Corporation (MRTC) and only 10% goes to capital expenditure (capex). In other words, seventy-seven (P0.77) centavos in every one peso (P1.00) increase in MRT rates will go to debt service while only ten centavos (P0.10) will go to service improvement in the form of capex.

In LRT lines 1 and 2, the DOTC said debt payments represent fifty-four (54%) percent and this is mostly to service debts of line 2.

“If such is the case, even if the government succeeds in forcing commuters to foot the bill, there will be no major service improvements in the system since most of the proceeds from the proposed rate adjustments will go to settle anomalous debts, “ said PM spokesman Wilson Fortaleza.

These debts, Fortaleza added, came from the highly onerous build-lease and transfer contract (BLT) which is very similar to the controversial IPP (independent power producers) in the power industry that contained sovereign guarantees.

“This BLT contract is the main culprit here and the government is not addressing this concern because it doesn’t want to antagonize the private sector which is still its main partner under the PPP (private-public partnership) program,” said Fortaleza.

In a position paper it resubmitted to DOTC yesterday, Partido ng Manggagawa urges the government to conduct of an honest-to-goodness inquiry into allegations that the private consortium MRTC and other parties have defrauded the government and the people under the BLT contract.

If such is proven, the group demands that the BLT contract is rescinded at no further cost to the government and any liabilities accrued from such onerous and fraudulent transactions should not be passed on to commuters.

“Huwag naman pati ang mga ganitong problema ay ipaubaya na lang ni PNoy kay Lord,” concluded Fortaleza.

PRESS RELEASE
Partido ng Manggagawa
13 December 2013
Contact: Wilson Fortaleza
09178233956

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